<PAGE> 1
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SCHEDULE 14A
(RULE 14a)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] CONFIDENTIAL, FOR USE OF THE COMMISSION
ONLY (AS PERMITTED BY RULE 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
ONE FUND, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
ONE FUND, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies: .......
(2) Aggregate number of securities to which transaction applies: ..........
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined): ............
(4) Proposed maximum aggregate value of transaction: ......................
(5) Total fee paid: .......................................................
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ...............................................
(2) Form, Schedule or Registration Statement No.: .........................
(3) Filing Party: .........................................................
(4) Date Filed: ...........................................................
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<PAGE> 2
One Financial Way
Cincinnati, Ohio
45242
Post Office Box 371
Cincinnati, Ohio
45201-0371
Telephone:
One Fund(SM) 800-578-8078
December 18, 2000
Dear ONE Fund Shareholder:
Enclosed are information and voting instructions from your ONE Fund Board of
Directors regarding a special meeting of the Core Growth portfolio's
shareholders on February 1, 2001, to seek your approval of a new subadvisory
agreement.
The parent of Pilgrim Baxter & Associates (the Core Growth portfolio's
subadviser) was recently merged into another corporation. Because of this, we
need to enter into a new subadvisory agreement with Pilgrim Baxter. The new
agreement will be identical to the current one. There will be no change in the
portfolio's management or fees.
Your Board of Directors believes that approval of the proposal is in your best
interests. We recommend that you vote FOR the proposal.
Your vote is important! To avoid extra expenses to ONE Fund, please complete,
sign and return the proxy promptly in the envelope provided. No postage is
needed if you mail it in the United States. As always, we thank you for your
confidence and support.
Sincerely,
/s/ JOHN J. PALMER
John J. Palmer
President
[OHIO NATIONAL FINANCIAL SERVICES LOGO]
<PAGE> 3
ONE FUND, INC.
One Financial Way
Montgomery, Ohio 45242
------------------------
CORE GROWTH PORTFOLIO
------------------------
NOTICE OF MEETING OF SHAREHOLDERS
February 1, 2001
A special meeting of the shareholders of the Core Growth Portfolio of ONE
Fund, Inc. will be held in ONE Fund's offices at One Financial Way in
Montgomery, Ohio. The meeting will begin at 10:00 a.m. eastern time on February
1, 2001. The reason for the meeting is to act on the proposed new subadvisory
agreement with Pilgrim Baxter & Associates, Ltd. and to transact any other
business that may properly come before the meeting.
You are entitled to receive this notice and to vote at the special meeting
if you were a shareholder of record of the Core Growth portfolio at the close of
business on November 10, 2000.
FOR THE REASONS GIVEN IN THE ATTACHED PROXY STATEMENT, WE (ONE FUND'S
MANAGEMENT AND BOARD OF DIRECTORS) RECOMMEND THAT YOU VOTE FOR THE PROPOSAL.
/S/ RONALD L. BENEDICT
Ronald L. Benedict
Secretary
December 18, 2000
<PAGE> 4
ONE FUND, INC.
One Financial Way
Montgomery, Ohio 45242
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS OF THE
CORE GROWTH PORTFOLIO
February 1, 2001
We (the management and Board of Directors of ONE Fund, Inc.) are soliciting
proxies for a special meeting of the shareholders of the Core Growth portfolio.
The meeting will be held at 10:00 a.m. eastern time on February 1, 2001. We are
sending you this proxy statement and its enclosures if you are a shareholder of
the Core Growth portfolio. We are mailing the statement on or about December 18,
2000. Each shareholder of record as of the close of business on November 10,
2000 is entitled to one vote for each share owned at that time.
You may revoke your proxy before the meeting by giving written notice to
the Secretary of ONE Fund or by appearing in person at the meeting and notifying
the Secretary that you intend to revoke your proxy. Your latest proxy revokes
any earlier ones. All proxies that are properly signed and received in time and
not revoked will be voted as marked. If you sign and return a proxy but do not
show how you want to vote, we will vote it in favor of the proposals.
Abstentions and broker non-votes are counted for purposes of determining a
quorum present for the transaction of business but are not tabulated as votes
"for" or "against" the proposal and, therefore, do not affect the outcome of the
vote.
ONE Fund will pay the printing, mailing and legal costs for soliciting the
proxies. The investment adviser, Ohio National Investments, Inc. (the "Adviser")
will pay all other costs. The subadviser, Pilgrim Baxter & Associates, Ltd.
("Pilgrim Baxter") will reimburse the Fund and the Adviser for some or all of
the proxy solicitation expenses. Employees of ONE Fund and the Adviser will not
get any extra compensation for soliciting proxies.
As of November 10, 2000, the number of issued and outstanding shares of the
Core Growth portfolio was 434,475 shares. At that time, The Ohio National Life
Insurance Company ("ONLI"), One Financial Way, Montgomery, Ohio 45242, was a
controlling person of the Core Growth portfolio because ONLI owned 250,100
shares (57.6% of the total) of the portfolio. Each share is entitled to one
vote.
FOR FREE COPIES OF ONE FUND'S MOST RECENT ANNUAL AND SEMI-ANNUAL FINANCIAL
REPORTS, CONTACT DENNIS R. TANEY (TREASURER) AT ONE FINANCIAL WAY, MONTGOMERY,
OHIO 45242. TELEPHONE 877-781-6392.
SUMMARY OF PROPOSAL
We have approved a new Subadvisory Agreement between the Adviser and
Pilgrim Baxter and we are now asking you to approve the agreement.
A majority vote of the eligible shareholders of the Core Growth portfolio
is required for the new agreement to be approved. Under the Investment Company
Act of 1940 (the "1940 Act"), a majority vote requires at least:
- 67% of the shares represented at a meeting (by proxy or in person)
where more than half of the outstanding shares are represented, or
- More than half of all the outstanding shares.
WE RECOMMEND THAT YOU APPROVE THE NEW SUBADVISORY AGREEMENT.
<PAGE> 5
INVESTMENT ADVISORY SERVICES
The Adviser is a wholly-owned subsidiary of ONLI. Under the Investment
Advisory Agreement between the Adviser and ONE Fund, the Adviser regularly
recommends an investment program consistent with ONE Fund's investment policies.
Once the Board of Directors approves an investment program, the Adviser
implements the program by placing orders for the purchase and sale of
securities. The Adviser also provides ONE Fund with office space, necessary
clerical personnel (other than those provided by agreements between the Fund and
Firstar Bank, N.A. (Cincinnati, Ohio) which serves as custodian for the
portfolio's assets, and American Data Services, Inc. (Hauppauge, New York) which
serves as transfer agent and servicing agent for the Fund), and services of
executive and administrative personnel. Ohio National Equities, Inc., One
Financial Way, Cincinnati, Ohio 45242 is the principal underwriter of ONE Fund.
The Fund does not have a primary Administrator, although Firstar Bank, N.A. and
American Data Services provide the administrative or business management
services indicated above.
The Adviser is also the investment adviser to the following portfolios of
ONE Fund (assets shown as of November 10, 2000):
<TABLE>
<S> <C>
Money Market.............................................. $15,559,214
International............................................. 11,921,745
Income.................................................... 5,625,634
Income & Growth........................................... 10,605,111
Growth.................................................... 9,859,496
Core Growth............................................... 7,155,806
Small Cap................................................. 3,461,211
S&P 500 Index............................................. 5,159,821
</TABLE>
Under a Service Agreement among ONE Fund, the Adviser and ONLI, ONLI has
agreed to furnish the Adviser, at cost, the research facilities, services and
personnel the Adviser may need to perform its duties under the Investment
Advisory Agreement. The Adviser has agreed to reimburse ONLI for its expenses in
this regard. ONE Fund has not paid to the Adviser, or to any of its affiliates,
any compensation for services other than under the Investment Advisory Agreement
during the last fiscal year. The Adviser is a wholly-owned subsidiary of ONLI.
The address of the Adviser, ONLI and ONE Fund is One Financial Way, Montgomery,
Ohio 45242.
The president of the Adviser is Christopher A. Carlson. The Adviser's
directors are Mr. Carlson, Michael A. Boedeker, David B. O'Maley, John J. Palmer
and Michael D. Stohler. Messrs. Carlson, Boedeker, and Stohler are principally
employed as investment officers of ONLI. Messrs. Carlson and Boedeker are also
vice presidents of ONE Fund. Mr. O'Maley is Chairman, President and Chief
Executive Officer of the Adviser's parent, ONLI. Mr. Palmer is President of ONE
Fund and Executive Vice President, Strategic Initiatives, of ONLI. The Adviser's
secretary, Ronald L. Benedict, is also the secretary and a director of ONE Fund.
He is principally employed as legal counsel to ONLI and its affiliates. The
business address of each of these individuals is One Financial Way, Montgomery,
Ohio 45242.
The Investment Advisory Agreement and Service Agreement were both entered
into as of May 1, 1996.
As compensation for its services, the Adviser receives from ONE Fund annual
fees on the basis of each portfolio's average daily net assets during the month
for which the fees are paid based on the following schedule:
- for the International Portfolio, 0.90% of the portfolio's daily net
assets;
- for each of the Income, Income & Growth, and Growth portfolios, 0.50%
of the first $100 million, 0.40% of the next $150 million, and 0.30%
of average daily net assets over $250 million;
- for the Money Market portfolio, 0.30% of the first $100 million, 0.25%
of the next $150 million, and 0.20% of average daily net assets over
$250 million;
2
<PAGE> 6
- for the Core Growth portfolio, 0.95% of the first $150 million, and
0.80% of average daily net assets over $150 million;
- for the S&P 500 Index portfolio, 0.40% of the first $100 million of
assets, 0.35% of the next $150 million, and 0.33% of net assets over
$250 million;
- for the Small Cap portfolio, 0.65% of the first $100 million, 0.55% of
the next $150 million and 0.45% of average daily net assets over $250
million;
However, the Adviser is presently waiving 0.15% of its fees from the Money
Market, Income, Income & Growth, Growth and Small Cap portfolios.
During 1999, the Adviser received $444,341 in fees from ONE Fund.
Under the Investment Advisory Agreement, ONE Fund authorizes the Adviser to
retain sub-advisers for the International and Core Growth portfolios, subject to
the approval of ONE Fund's Board of Directors. The Adviser has entered into
Sub-Advisory Agreements with sub-advisers, to manage the investment and
reinvestment of those portfolios' assets, subject to supervision by the Adviser.
As compensation for their sub-advisory services the Adviser pays:
- Federated Global Investment Management Corp. fees at the annual rate of
0.40% of the first $200 million, and 0.35% of average daily net assets in
excess of $200 million of the International Portfolio, and
- Pilgrim Baxter a fee at the annual rate of 0.65% of the first $50
million, 0.60% of the next $100 million, and 0.50% of average daily net
assets in excess of $150 million of the Core Growth Portfolio. For the
fiscal year ended June 30, 2000, the Adviser paid Pilgrim Baxter
$40,670.50 in subadvisory fees.
The Investment Advisory Agreement and the Service Agreement were approved
by ONE Fund's Board of Directors on January 24, 1996 and the shareholders
(except for the S&P 500 Index and Core Growth portfolio shareholders) on March
28, 1996. The Board approved those agreements for the S&P 500 Index portfolio on
May 5, 1999, and the S&P 500 Index portfolio shareholders approved them on
December 15, 1999. The Core Growth shareholders approved those agreements and
their Subadvisory Agreement on October 31, 1996. The Board approved the
Subadvisory Agreement for the Core Growth portfolio on August 22, 1996, and the
Subadvisory Agreement for the International portfolio on December 9, 1998.
These agreements will continue in force from year to year if they are
approved at least annually by (a) a majority of ONE Fund's directors who are not
parties to the agreements or interested persons of any such party, with votes to
be cast in person at a meeting called for the purpose of voting on such
continuance, and also by (b) a majority of the Board of Directors or by a
majority of the outstanding voting securities of each portfolio voting
separately.
The Investment Advisory, Service and Sub-Advisory Agreements may be
terminated at any time, without the payment of any penalty, if we give 60 days'
written notice to the Adviser or, as to any portfolio, by a vote of the majority
of the portfolio's outstanding voting securities. The Investment Advisory
Agreement may be terminated by the Adviser on 90 days' written notice to ONE
Fund. The Service Agreement may be terminated, without penalty, by the Adviser
or ONLI on 90 days' written notice to ONE Fund and the other party. The
Sub-Advisory Agreements may be terminated, without penalty, by the Adviser or
the sub-adviser on 90 days' written notice to ONE Fund and the other party. An
Agreement will automatically terminate if it is assigned.
3
<PAGE> 7
In addition to being the investment adviser to ONE Fund, the Adviser is
also the investment adviser to Ohio National Fund, Inc. and Dow Target Variable
Fund LLC ("Dow Target"). Ohio National Fund presently consists of the following
portfolios:
<TABLE>
<CAPTION>
OHIO NATIONAL FUND PORTFOLIO NET ASSETS (11/10/2000)
---------------------------- -----------------------
<S> <C>
Equity............................................. $346,995,802
Money Market....................................... 72,406,670
Bond............................................... 26,555,893
Omni............................................... 141,648,737
International...................................... 128,431,113
International Small Company........................ 32,539,214
Capital Appreciation............................... 66,080,339
Small Cap.......................................... 172,446,936
Aggressive Growth.................................. 25,954,692
Core Growth........................................ 41,403,311
Growth & Income.................................... 118,343,946
Capital Growth..................................... 42,448,930
S&P 500 Index...................................... 213,230,185
High Income Bond................................... 14,436,430
Equity Income...................................... 8,641,506
Blue Chip.......................................... 7,147,559
Social Awareness................................... 3,072,176
Strategic Income................................... 3,191,697
Firstar Growth & Income............................ 4,255,253
Relative Value..................................... 11,157,170
Nasdaq-100 Index................................... 6,953,193
</TABLE>
Dow Target presently consists of the following types of portfolios:
<TABLE>
<CAPTION>
NET ASSETS (11/10/2000)
-----------------------
<S> <C>
Dow Target 10...................................... $ 11,203,902
Dow Target 5....................................... 2,464,542
</TABLE>
As compensation for its services, the Adviser receives from Ohio National
Fund annual fees on the basis of each portfolio's average daily net assets
during the month for which the fees are paid based on the following schedule:
- for the Equity portfolio, 0.80% of the first $500 million, and 0.75%
of average daily net assets over $500 million;
- for each of the Bond, Omni and Social Awareness portfolios, 0.60% of
the first $100 million, 0.50% of the next $150 million, 0.45% of the
next $250 million, 0.40% of the next $500 million, 0.30% of the next
$1 billion, and 0.25% of average daily net assets over $2 billion;
- for the Money Market portfolio, 0.30% of the first $100 million, 0.25%
of the next $150 million, 0.23% of the next $250 million, 0.20% of the
next $500 million, and 0.15% of average daily net assets over $1
billion; (The Adviser is presently waiving any of its fees for the
Money Market portfolio in excess of 0.25%.)
4
<PAGE> 8
- for each of the International, Firstar Growth & Income, Relative
Value, Capital Growth and Blue Chip portfolios, 0.90% of each
portfolio's daily net assets; (The Adviser is presently waiving any of
its fees for the International portfolio in excess of 0.85%)
- for each of the Capital Appreciation, Small Cap, Aggressive Growth and
Strategic Income portfolios, 0.80% of each portfolio's average daily
net assets;
- for the Core Growth portfolio, 0.95% of the first $150 million, and
0.80% of average daily net assets over $150 million;
- for the Growth & Income portfolio, 0.85% of the first $200 million,
and 0.80% of average daily net assets over $200 million;
- for the S&P 500 Index portfolio, 0.40% of the first $100 million,
0.35% of the next $150 million, and 0.33% of average daily net assets
over $250 million;
- for the International Small Company portfolio, 1.00% of that
portfolio's average daily net assets, and
- for each of the High Income Bond, Equity Income and Nasdaq-100 Index
portfolios, 0.75% of each portfolio's average daily net assets.
During 1999, the Adviser received $7,848,175 in fees from Ohio National
Fund.
As compensation for its services to Dow Target, the Adviser receives from
Dow Target a fee at an annual rate of 0.60% of the average daily net assets of
Dow Target during the month for which the fee is paid. During 1999, the Adviser
received $45,993 in fees from Dow Target.
As of November 10, 2000, Ronald Benedict, a director of ONE Fund and
secretary of both ONE Fund and the Adviser, owned 1,202 shares of the Core
Growth portfolio. Members of management of ONE Fund and the Adviser, as a group,
did not own more than 1% of the outstanding shares of any portfolio at that
time.
REASON FOR SHAREHOLDER VOTE
On September 25, 2000, Pilgrim Baxter's parent, United Asset Management
Corporation, was purchased by, and merged into, Old Mutual plc, a British
company. As a result of this change of control, we need to execute a new
Subadvisory Agreement with Pilgrim Baxter. The Board of Directors voted
unanimously to approve a new Subadvisory Agreement that is identical to the
current Subadvisory Agreement in every respect except for its effective date.
The new Subadvisory Agreement will take effect on the same day the Core Growth
portfolio's shareholders approve it. A copy of the new Subadvisory Agreement is
attached to this proxy statement as Exhibit A.
Pilgrim Baxter has managed the investments of the Core Growth portfolio
since the portfolio's inception in November 1996. The change of control of
Pilgrim Baxter's parent did not result in any change in the portfolio manager
for the Core Growth portfolio, nor will it result in any other change in the
portfolio's management or operations.
Although the new Subadvisory Agreement is identical to our existing
agreement with Pilgrim Baxter, you must vote to approve the new Subadvisory
Agreement because, under the 1940 Act, the change of control of Pilgrim Baxter
automatically terminates the current Subadvisory Agreement. The Board of
Directors voted unanimously to continue the current Subadvisory agreement in
effect until the earlier of the date the new Subadvisory Agreement is approved
by shareholders or 150 days from the change of control of Pilgrim Baxter. If you
do not approve the new Subadvisory Agreement, the Adviser would need to take
over management of the portfolio or we would need to find another subadviser.
Being pleased with the services rendered by Pilgrim Baxter under the
current Subadvisory Agreement, WE RECOMMEND THAT YOU VOTE TO APPROVE THE NEW
SUBADVISORY AGREEMENT.
5
<PAGE> 9
SHAREHOLDERS PROPOSALS
ONE Fund is incorporated under Maryland law which does not require mutual
funds to hold annual shareholders meetings. We generally intend to hold a
meeting every three years to elect directors. We hold special meetings whenever
necessary. Shareholders may have included in the proxy statement for the next
shareholders meeting certain proposals for shareholder action to be introduced
at the meeting. We must receive notice of any shareholder proposal at least 120
days before the next meeting for the proposal to be included in the proxy
solicitation materials for that meeting.
6
<PAGE> 10
EXHIBIT A
SUBADVISORY AGREEMENT
This Agreement is made as of the first day of February, 2001, by and
between OHIO NATIONAL INVESTMENTS, INC., an Ohio corporation (the "Adviser"),
and Pilgrim Baxter & Associates, Ltd., a Delaware corporation (the
"Sub-Adviser").
WHEREAS, ONE FUND, INC. (the "Fund"), is a Maryland corporation that is
registered under the Investment Company Act of 1940, as amended, (together with
the regulations promulgated pursuant thereto, the "1940 Act"); and
WHEREAS, the Adviser is a registered investment adviser under the
Investment Advisers Act of 1940, as amended, (together with the regulations
promulgated pursuant thereto, the "Advisers Act"); and
WHEREAS, the Adviser has been appointed as investment adviser to the Fund
in accordance with the 1940 Act and the Advisers Act; and
WHEREAS, the Sub-Adviser is registered as an investment adviser under the
Advisers Act and engages in the business of providing investment advisory
services; and
WHEREAS, the Fund has authorized the Adviser to appoint the Sub-Adviser,
subject to the requirements of the 1940 Act and the Advisers Act, as a
sub-adviser with respect to that portion of the assets of the Fund designated as
the CORE GROWTH PORTFOLIO of the Fund on the terms and conditions set forth
below;
NOW, THEREFORE, IT IS HEREBY AGREED as follows:
SECTION 1. INVESTMENT ADVISORY SERVICES
(a) The Adviser hereby retains the Sub-Adviser, and the Sub-Adviser
hereby accepts engagement by the Adviser, to supervise and manage on a
fully-discretionary basis the cash, securities and other assets of the Core
Growth Portfolio that the Adviser shall from time to time place under the
supervision of the Sub-Adviser (such cash, securities and other assets
initially and as same shall thereafter be increased or decreased by the
investment performance thereof and by additions thereto and withdrawals
therefrom by the Adviser shall hereinafter be referred to as the
"Portfolio").
(b) All activities by the Sub-Adviser on behalf of the Adviser and the
Portfolio shall be in accordance with the investment objectives, policies
and restrictions set forth in the 1940 Act and in the Fund's prospectus and
statement of additional information, as amended from time to time
(together, the "Prospectus") and as interpreted from time to time by the
Board of Directors of the Fund and by the Adviser. All activities of the
Sub-Adviser on behalf of the Adviser and the Portfolio shall also be
subject to the due diligence oversight and direction of the Adviser.
(c) Subject to the supervision of the Adviser, the Sub-Adviser shall
have the sole and exclusive responsibility to select members of securities
exchanges, brokers, dealers and futures commission merchants for the
execution of transactions of the Portfolio and, when applicable, shall
negotiate commissions in connection therewith. All such selections shall be
made in accordance with the Fund's policies and restrictions regarding
brokerage allocation set forth in the Prospectus.
(d) In carrying out its obligations to manage the investments and
reinvestments of the assets of the Portfolio, the Sub-Adviser shall:
(1) obtain and evaluate pertinent economic, statistical,
financial and other information affecting the economy generally and
individual companies or industries the securities of which are included in
the Portfolio or are under consideration for inclusion therein;
(2) formulate and implement a continuous investment program for
the Portfolio consistent with the investment objectives and related
investment policies and restrictions for such Portfolio as set forth in the
Prospectus; and
A-1
<PAGE> 11
(3) take such steps as are necessary to implement the
aforementioned investment program by placing orders for the purchase and
sale of securities.
(e) In connection with the purchase and sale of securities of the
Portfolio, the Sub-Adviser shall arrange for the transmission to the
Adviser and the Portfolio's custodian on a daily basis such confirmation,
trade tickets and other documents as may be necessary to enable them to
perform their administrative responsibilities with respect to the
Portfolio. With respect to Portfolio securities to be purchased or sold
through the Depository Trust Company, the Sub-Adviser shall arrange for the
automatic transmission of the I.D. confirmation of the trade to the
Portfolio's custodian.
(f) In connection with the placement of orders for the execution of
the Portfolio's securities transactions, the Sub-Adviser shall create and
maintain all necessary records of the Portfolio as are required of an
investment adviser of a registered investment company including, but not
limited to, records required by the 1940 Act and the Advisers Act. All such
records pertaining to the Portfolio shall be the property of the Fund and
shall be available for inspection and use by the Securities and Exchange
Commission, any other regulatory authority having jurisdiction, the Fund,
the Adviser or any person retained by the Fund or the Adviser. Where
applicable, such records shall be maintained by the Sub-Adviser for the
period and in the place required by Rule 31a-2 under the 1940 Act.
(g) The Sub-Adviser shall render such reports to the Adviser and/or to
the Board of Directors of the Fund concerning the investment activity and
composition of the Portfolio in such form and at such intervals as the
Adviser or the Board may from time to time reasonably require.
(h) In acting under this Agreement, the Sub-Adviser shall be an
independent contractor and not an agent of the Adviser or the Fund.
SECTION 2. EXPENSES
(a) The Sub-Adviser shall assume and pay all of its own costs and
expenses, including those for furnishing such office space, office
equipment, office personnel and office services as the Sub-Adviser may
require in the performance of its duties under this Agreement.
(b) The Fund shall bear all expenses of the Portfolio's organization
and registration, and the Fund and Adviser shall bear all of their
respective expenses of their operations and businesses not expressly
assumed or agreed to be paid by the Sub-Adviser under this Agreement. In
particular, but without limiting the generality of the foregoing, the Fund
shall pay any fees due to the Adviser, all interest, taxes, governmental
charges or duties, fees, brokerage and commissions of every kind arising
hereunder or in connection herewith, expenses of transactions with
shareholders of the Portfolio, expenses of offering interests in the
Portfolio for sale, insurance, association membership dues, all charges of
custodians (including fees as custodian and for keeping books, performing
portfolio valuations and rendering other services to the Fund), independent
auditors and legal counsel, expenses of preparing, printing and
distributing all prospectuses, proxy material, reports and notices to
shareholders of the Fund, and all other costs incident to the Portfolio's
existence.
SECTION 3. USE OF SERVICES OF OTHERS
The Sub-Adviser may (at its expense except as set forth in Section 2
hereof) employ, retain or otherwise avail itself of the services or facilities
of other persons or organizations for the purpose of providing the Sub-Adviser
with such statistical or factual information, such advice regarding economic
factors and trends or such other information, advice or assistance as the
Sub-Adviser may deem necessary, appropriate or convenient for the discharge of
the Sub-Adviser's obligations hereunder or otherwise helpful to the Fund and the
Portfolio.
SECTION 4. SUB-ADVISORY FEES
In consideration of the Sub-Adviser's services to the Fund hereunder, the
Sub-Adviser shall be entitled to a sub-advisory fee, payable monthly, at the
annual rate of 0.65% of the first fifty million dollars ($50,000,000) of the
average daily net assets of the Portfolio during the month preceding each
payment, 0.60% of the next
A-2
<PAGE> 12
one hundred million dollars ($100,000,000) of the average daily net assets of
the Portfolio, and 0.50% of the average daily net assets of the Portfolio in
excess of one hundred and fifty million dollars ($150,000,000) (the
"Sub-Advisory Fee"). The Sub-Advisory Fee shall be accrued for each calendar day
and the sum of the daily Sub-Advisory Fee accruals shall be paid monthly to the
Sub-Adviser on or before the fifth business day of the next succeeding month.
The daily fee accruals will be computed on the basis of the valuations of the
total net assets of the Portfolio as of the close of business each day. The
Sub-Advisory Fee shall be payable solely by the Adviser, and the Fund shall not
be liable to the Sub-Adviser for any unpaid Sub-Advisory Fee.
SECTION 5. LIMITATION OF LIABILITY OF SUB-ADVISER
(a) The Sub-Adviser shall be liable for losses resulting from its own
acts or omissions caused by the Sub-Adviser's willful misfeasance, bad
faith or gross negligence in the performance of its duties hereunder or its
reckless disregard of its duties under this Agreement, and nothing herein
shall protect the Sub-Adviser against any such liability to the
shareholders of the Fund or to the Adviser. The Sub-Adviser shall not be
liable to the Fund or to any shareholder of the Fund or to the Adviser for
any claim or loss arising out of any investment or other act or omission in
the performance of the Sub-Adviser's duties under this Agreement, or for
any loss or damage resulting from the imposition by any government of
exchange control restrictions which might affect the liquidity of the
Fund's assets maintained with custodians or securities depositories in
foreign countries, or from any political acts of any foreign governments to
which such assets might be exposed, or for any tax of any kind (other than
taxes on the Sub-Adviser's income), including without limitation any
statutory, governmental, state, provincial, regional, local or municipal
imposition, duty, contribution or levy imposed by any government or
governmental agency upon or with respect to such assets or income earned
with respect thereto (collectively "Taxation"). Notwithstanding the
foregoing sentence, the Sub-Adviser shall be liable for taxes or tax
penalties incurred by the Fund for any failure of the Portfolio to qualify
as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended, as a result of the Sub-Adviser's
management of the Portfolio.
(b) In the event the Sub-Adviser is assessed any Taxation in respect
of the assets, income or activities of the Portfolio, the Adviser and the
Fund jointly will indemnify the Sub-Adviser for all such amounts wherever
imposed, together with all penalties, charges, costs and interest relating
thereto and all expenditures, including reasonable attorney's fees,
incurred by the Sub-Adviser in connection with the defense or settlement of
any such assessment. The Sub-Adviser shall undertake and control the
defense or settlement of any such assessment, including the selection of
counsel or other professional advisers, provided that the selection of such
counsel and advisers and the settlement of any assessment shall be subject
to the approval of the Adviser and the Fund, which approvals shall not be
unreasonably withheld. The Adviser and the Fund shall have the right to
retain separate counsel and assume the defense or settlement on behalf of
the Adviser and the Fund, as the case may be, of any such assessment if
representation of the Adviser and the Fund by counsel selected by the
Sub-Adviser would be inappropriate due to actual or potential conflicts of
interest.
SECTION 6. SERVICES TO OTHER CLIENTS AND THE FUND
(a) Subject to compliance with the 1940 Act, nothing contained in this
Agreement shall be deemed to prohibit the Sub-Adviser or any of its
affiliated persons from acting, and being separately compensated for
acting, in one or more capacities on behalf of the Fund. The Adviser and
the Fund understand that the Sub-Adviser may act as investment manager or
in other capacities on behalf of other customers including entities
registered under the 1940 Act. While information, recommendations and
actions which the Sub-Adviser supplies to and does on behalf of the
Portfolio shall in the Sub-Adviser's judgment be appropriate under the
circumstances in light of the investment objectives and policies of the
Fund, as set forth in the Prospectus delivered to the Sub-Adviser from time
to time, it is understood and agreed that they may be different from the
information, recommendations and actions the Sub-Adviser or its affiliated
persons supply to or do on behalf of other clients. The Sub-Adviser and its
affiliated persons shall supply information, recommendations and any other
services to the Portfolio and to any other client in an
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<PAGE> 13
impartial and fair manner in order to seek good results for all clients
involved. As used herein, the term "affiliated person" shall have the
meaning assigned to it in the 1940 Act.
(b) On occasions when the Sub-Adviser deems the purchase or sale of a
security to be in the best interest of the Portfolio as well as other
customers, the Sub-Adviser may, to the extent permitted by applicable law,
aggregate the securities to be so sold or purchased in order to obtain the
best execution or lower brokerage commissions, if any. The Sub-Adviser may
also on occasion purchase or sell a particular security for one or more
customers in different amounts. On either occasion, and to the extent
permitted by applicable law and regulations, allocation of the securities
so purchased or sold, as well as the expenses incurred in the transaction,
will be made by the Sub-Adviser in the manner it considers to be the most
equitable and consistent with its fiduciary obligations to the Fund and to
such other customers.
(c) The Sub-Adviser agrees to use the same skill and care in providing
services to the Fund as it uses in providing services to other similar
accounts for which it has investment responsibility. The Sub-Adviser will
conform with all applicable rules and regulations of the Securities and
Exchange Commission.
SECTION 7. REPORTS TO THE SUB-ADVISER
The Adviser shall furnish to the Sub-Adviser the Prospectus, proxy
statements, reports and other information relating to the business and affairs
of the Fund as the Sub-Adviser may, at any time or from time to time, reasonably
require in order to discharge the Sub-Adviser's duties under this Agreement.
SECTION 8. TERM OF AGREEMENT
Provided that this Agreement shall have first been approved by the Board of
Directors of the Fund, including a majority of the members thereof who are not
interested persons (as defined in the 1940 Act) of either party, by a vote cast
in person at a meeting called for the purpose of voting such approval, then this
Agreement shall be effective on the date hereof. Unless earlier terminated as
hereinafter provided, this Agreement shall continue in effect until approved by
a majority vote of the voting securities of the Portfolio, at a meeting to take
place not more than one year after the effective date of the Fund's registration
statement relating to the Portfolio. Thereafter, this Agreement shall continue
in effect from year to year, subject to approval annually by the Board of
Directors of the Fund or by vote of a majority of the voting securities of the
Portfolio and also, in either event, by the vote, cast in person at a meeting
called for the purpose of voting on such approval, of a majority of the
Directors of the Fund who are not parties to this Agreement or interested
persons (as defined in the 1940 Act) of any such person.
SECTION 9. TERMINATION OF AGREEMENT; ASSIGNMENT
(a) This Agreement may be terminated by either party hereto without
the payment of any penalty, upon 90 days' prior notice in writing to the
other party and to the Fund, or upon 60 days' written notice by the Fund to
the two parties; provided, that in the case of termination by the Fund such
action shall have been authorized by resolution of a majority of the Board
of Directors of the Fund or by vote of a majority of the voting securities
of the Portfolio. In addition, this Agreement shall terminate upon the
later of (1) the termination of the Adviser's agreement to provide
investment advisory services to the Fund or (2) notice to the Sub-Adviser
that the Adviser's agreement to provide investment advisory services to the
Fund has terminated.
(b) This Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
(c) Termination of this Agreement for any reason shall not affect
rights of the parties that have accrued prior thereto.
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<PAGE> 14
SECTION 10. NOTICES
(a) The Sub-Adviser agrees to promptly notify the Adviser of the
occurrence of any of the following events: (1) any change in the
Portfolio's portfolio manager; (2) the Sub-Adviser fails to be registered
as an investment adviser under the Advisers Act or under the laws of any
jurisdiction in which the Sub-Adviser is required to be registered as an
investment adviser in order to perform its obligations under this
Agreement; (3) the Sub-Adviser is the subject of any action, suit,
proceeding, inquiry or investigation at law or in equity, before or by any
court, public board or body, involving the affairs of the Portfolio; or (4)
any change in control of the Sub-Adviser.
(b) Any notice given hereunder shall be in writing and may be served
by being sent by telex, facsimile or other electronic transmission or sent
by registered mail or by courier to the address set forth below for the
party for which it is intended. A notice served by mail shall be deemed to
have been served seven days after mailing and in the case of telex,
facsimile or other electronic transmission twelve hours after dispatch
thereof. Addresses for notice may be changed by written notice to the other
party.
If to the Adviser:
Ohio National Investments, Inc.
P.O. Box 237
Cincinnati, Ohio 45201
Fax No. (513) 794-4506
With a copy to:
Christopher A. Carlson, President
Ohio National Investments, Inc.
P.O. Box 237
Cincinnati, Ohio 45201
If to the Sub-Adviser:
Harold J. Baxter, Chairman & CEO
Pilgrim Baxter & Associates, Ltd.
825 Duportail Road
Wayne, Pennsylvania 19087
Fax No. (610) 989-3850
SECTION 11. GOVERNING LAW
This Agreement shall be governed by and subject to the requirements of the
laws of the State of Ohio without reference to the choice of law provisions
thereof.
SECTION 12. APPLICABLE PROVISIONS OF LAW
The Agreement shall be subject to all applicable provisions of law,
including, without limitation, the applicable provisions of the 1940 Act, and to
the extent that any provisions herein contained conflict with any such
applicable provisions of law, the latter shall control.
SECTION 13. COUNTERPARTS
This Agreement may be entered into in any number of counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
IN WITNESS WHEREOF this Agreement has been executed by the parties hereto
as of the day and year first above written.
A-5
<PAGE> 15
OHIO NATIONAL INVESTMENTS, INC.
By:
-------------------------------------
Christopher A. Carlson, President
PILGRIM BAXTER & ASSOCIATES, LTD.
By:
-------------------------------------
Harold J. Baxter,
Chief Executive Officer
Accepted and Agreed:
ONE FUND, INC.
By:
--------------------------------------------------------
John J. Palmer, President
A-6
<PAGE> 16
PROXY
ONE FUND, INC.
I (we) acknowledge receipt of a copy of the Notice of Shareholders'
Meeting, Proxy Statement and semi-annual report. I (we) appoint each of Ronald
L. Benedict and John J. Palmer to be my (our) proxies and attorneys with full
power of substitution and revocation to vote my (our) ONE Fund, Inc. shares at
the special meeting of shareholders to be held on February 1, 2001 (and at any
adjournments of that meeting) as specified below, and in accordance with their
best judgment on any other business that may properly come before the meeting.
THIS PROXY RELATES TO A SOLICITATION BY THE BOARD OF DIRECTORS.
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<TABLE>
<S> <C> <C> <C> <C> <C>
To approve the new Subadvisory Agreement with Pilgrim Baxter & Associates, Ltd.:
a. For or Against or Abstain
[ ] [ ] [ ]
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</TABLE>
<TABLE>
<S> <C>
Dated: ---------------------------- -----------------------------------------------------------
Signature of Shareholder(s)
</TABLE>
Please sign your name as it appears on the back of this form. If signing
for an estate, trust or corporation, state your title or capacity. If joint
owners, each should sign. Your shares will be voted in accordance with your
directions. PLEASE RETURN THIS PROXY IN THE ENVELOPE PROVIDED.
